Class A Redefined – Global Adjustment changes could spell big savings for some

On May 1, 2014 the Government of Ontario changed how the Global Adjustment will be charged to select customers. According to the Government of Ontario eligible customers will save between 15% and 20% on their annual electricity bill.

Background

In 2011, the Government of Ontario implemented the Industrial Conservation Initiative (ICI) whereby the largest consumers, or class A consumers, are charged the global adjustment (GA) based on the percentage of their peak demand that contributes to overall system demand during the five peak hours of the year. This methodology is referred to as 5 Coincident Peak (or 5-CP) referring to a customers peak demand at the time when demand in the province is the highest.

Revised Eligibility Criteria

Until very recently, eligibility for Class A was restricted to the very largest consumers, those with an average monthly peak demand greater than 5 megawatts (MW). However, the number of Ontario businesses that can benefit from this initiative has just expanded considerably.

A few days ago, the government expanded the eligibility criteria of Class A (filing of the enacting regulation) by reducing the consumption threshold required to qualify from an average hourly peak demand of 5 MW to 3 MW. The consumers would be assessed on their contributions to the top five demand peaks of the current base period (May 1, 2014 to April 30, 2015). The adjustment period begins on July 1, 2015.

Additionally, in order to qualify as Class A, the consumer must:

(1) formally give notice of electing to be Class A to its licensed distribution by June 15, and

(2) operate a facility that fits into one of the following NAICS sectors:

NAICS

Sector Name

493120

Refrigerated Warehousing and Storage

21

Mining, Quarrying, and Oil and Gas Extraction

31, 32, 33

Manufacturing

518

Data Processing, Hosting and Related Services

1114

Greenhouse, Nursery, and Floriculture Production

According to the government of Ontario, Class A consumers will save on average 15% to 20% on their energy cost.

Sector/NAICS

Average Monthly Peak Demand

Annual Estimated Savings

Reduction to Total Bill

Manufacturing (31-33)

4.1 MW

~ $400,000

12%

Data Processing (518)

3.2 MW

~ $900,000

23%

Source: Ontario Ministry of Finance

Additionally, by reducing their GA charges, Class A consumers can better manage their total electricity cost by hedging their Hourly Ontario Electricity Price (HOEP) exposure. The augmented hedge effectiveness represents an opportunity to save even further on their electricity bill.

We can help you determine your eligibility and assess the impact these changes will have on your GA costs. Get in touch with a member of our team today.